Australian superannuation/pension and tax

Hi everyone, on the off chance some of the experts here might know, or know someone who knows :-)

I have been offered a job with an Australian employer, and they are legally obliged to pay a pension (they call it superannuation) to their employees as part of the package. I am uncertain if a dual US-British citizen can safely hold an Australian super without incurring PFIC, punitive taxes, etc etc. The employers don't know either, and I haven't managed to find reliable or consistent advice online. There seem to be some indications that it is not mentioned in the tax treaty at all (therefore grey area) and also indications that the way supers are set up is a trust, and therefore falls foul of US tax rules for expats, and would be heavily taxed.

If anyone has any advice or pointers that would be much appreciated.
I will be seeking professional advice as my tax affairs get more complicated (do they ever get simpler?? I wish) but I am currently in contract negotiations and have hit this roadblock, and would like to get a general steer on it so negotiations can proceed with accurate information.

Best wishes
Tom

You are right to be concerned about ending up with a PFIC or Trust issue and I don’t know the answer. I looked at the US-Australian treaty and it is far from clear, so you will need advice I think from a pro familiar with the treaty. The US-UK treaty is similar and I believe  the UK equivalent of an employer superannuation plan is covered by a pension wrapper and not subject to US taxes or PFIC issues during the accumulation phase. I also believe that the UK version is not considered a Foreign Grantor Trust as long as the employee doesn’t put more into the plan than the employer.

Good luck with your inquiries.

You are correct that super is not covered in the treaty, so one can only rely on US domestic law. I would negotiate as a part of the relocation package that the employer pays for professional advice.

Thank you both for those thoughts. When I get advice I will post it here in case it helps others in future.

Thank you both for those thoughts. When I get advice I will post it here in case it helps others in future.

Please do, and good luck in your move.